Washington Tackles Loan Mod Roadblock

The White House announced a new initiative today in order to help alleviate a stubborn roadblock that has hampered the success of several loan modification programs. By providing financial incentives to second lien holders, the Obama Administration is hoping to allow homeowners with “piggyback” mortgages to modify more easily:

…those loans, which are attached to about half of all troubled mortgages, have been an obstacle to efforts to alleviate the housing crisis. That’s because borrowers who are trying to get their primary mortgage modified at a lower monthly payment need the permission of the company holding the second mortgage.

Utilizing $50 billion in “financial rescue money,” the White House will offer lenders $500 for each modified loan, and then an additional $250 a year for up to three years as long as the borrower doesn’t default. Borrowers will receive up to$1,000 over a five-year period “applied to the principal balance of their primary mortgage, and the government would pick up part of investors’ costs as well.”

This initiative offers the same structure as the controversial incentives provided under the president’s Homeowner Stability Initiative as part of the Homeowner Affordability and Stability Plan (HASP), just with smaller dollar amounts.

“The structure of piggyback mortgages make them the most difficult to modify,” said HSH Vice President Keith Gumbinger.

Additionally, the administration is said to be offering lenders up to $2,500 to participate in the unsuccessful Hope for Homeowners program.

2 Responses to “Washington Tackles Loan Mod Roadblock”

While you can do your own loan modification, unless you know exactly what you are doing, it can be a huge risk, especially when you have a second mortgage. With all the scams out there, it might be a good idea to consult an experienced loan attorney. Because of State Bar standards, they won’t be able to get away with taking your money and running. Make sure the firm you choose is specifically experienced with loan mods. If you are unsure how to proceed, you might want to take a look at http://www.castlelawgroup.com They have a lot of information on their website about loan modifications

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Tim Manni

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which concentrates on the latest developments in the mortgage and housing
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